Bad Credit Score

Overview

Your credit score impacts your life in many ways, including your ability to buy a home, rent an apartment, or land a jo

While many people never have to worry about this, as they have good or excellent credit, others are not as fortunate. Instead, for one reason or another, they have a bad credit score.

FICO credit scores range from 300 to 850, with a bad score considered anything below 620.

Score and your Goals

A bad credit score can make it difficult to obtain credit, but here’s what you need to remember : you don’t have to let this stop you from reaching your financial goals.

Not only are there credit options for consumers with bad credit, but there are also steps you can take to increase your score in the future.

 

Bad Credit and Securing a Personal Loan

The higher your credit score the easier it is to secure a personal loan. Even so, it’s not out of the question to obtain this type of loan with bad credit.

If you’re interested in a personal loan but your credit isn’t up to par, the best thing you can do is compare products from a variety of lenders. This will go a long way in helping you find one that is willing to extend an offer.

One of the biggest benefits of excellent credit is access to the lowest interest rates. Unfortunately, bad credit means your lender will need to take additional steps to protect itself against a potential default.

In addition to requiring collateral, your interest rate is likely to be higher than average.

For example, someone with excellent credit may qualify for a rate in the five percent range. However, with bad credit, a rate of 30 percent or higher is not out of the question.

 

Here are several steps to take as quickly as possible

  • Contact creditors to settle any collection actions present on your credit report
  • Pay off any overdue accounts
  • Pay your bills in full and on time in the future
  • Don’t apply for too much new credit
  • Pay down your current debt, such as that associated with credit card accounts

You’re not going to see your score increase by 100+ points overnight, but the right strategy will have you making progress sooner rather than later.

A bad credit score can bring a variety of challenges to your financial life, but it doesn’t have to stop you from applying for and securing a loan.

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